Human Costs Are Built Into an iPad in China
So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.
“The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,” said an executive at one company that helped bring the iPad to market. “And then they’ll come back the next year, and force a 10 percent price cut.”
In January 2010, workers at a Chinese factory owned by Wintek, an Apple manufacturing partner, went on strike over a variety of issues, including widespread rumors that workers were being exposed to toxins. Investigations by news organizations revealed that over a hundred employees had been injured by n-hexane, a toxic chemical that can cause nerve damage and paralysis.
Employees said they had been ordered to use n-hexane to clean iPhone screens because it evaporated almost three times as fast as rubbing alcohol. Faster evaporation meant workers could clean more screens each minute.
Apple commented on the Wintek injuries a year later. In its supplier responsibility report, Apple said it had “required Wintek to stop using n-hexane” and that “Apple has verified that all affected workers have been treated successfully, and we continue to monitor their medical reports until full recuperation.” Apple also said it required Wintek to fix the ventilation system.
That same month, a New York Times reporter interviewed a dozen injured Wintek workers who said they had never been contacted by Apple or its intermediaries, and that Wintek had pressured them to resign and take cash settlements that would absolve the company of liability. After those interviews, Wintek pledged to provide more compensation to the injured workers and Apple sent a representative to speak with some of them.
Six months later, trade publications reported that Apple significantly cut prices paid to Wintek.
“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”
Wintek is still one of Apple’s most important suppliers. Wintek, in a statement, declined to comment except to say that after the episode, the company took “ample measures” to address the situation and “is committed to ensuring employee welfare and creating a safe and healthy work environment.”
Many major technology companies have worked with factories where conditions are troubling. However, independent monitors and suppliers say some act differently. Executives at multiple suppliers, in interviews, said that Hewlett-Packard and others allowed them slightly more profits and other allowances if they were used to improve worker conditions.
“Our suppliers are very open with us,” said Zoe McMahon, an executive in Hewlett-Packard’s supply chain social and environmental responsibility program. “They let us know when they are struggling to meet our expectations, and that influences our decisions.”
On the afternoon of the blast at the iPad plant, Lai Xiaodong telephoned his girlfriend, as he did every day. They had hoped to see each other that evening, but Mr. Lai’s manager said he had to work overtime, he told her.
He had been promoted quickly at Foxconn, and after just a few months was in charge of a team that maintained the machines that polished iPad cases. The sanding area was loud and hazy with aluminum dust. Workers wore masks and earplugs, but no matter how many times they showered, they were recognizable by the slight aluminum sparkle in their hair and at the corners of their eyes.
Just two weeks before the explosion, an advocacy group in Hong Kong published a report warning of unsafe conditions at the Chengdu plant, including problems with aluminum dust. The group, Students and Scholars Against Corporate Misbehavior, or Sacom, had videotaped workers covered with tiny aluminum particles. “Occupational health and safety issues in Chengdu are alarming,” the report read. “Workers also highlight the problem of poor ventilation and inadequate personal protective equipment.”
A copy of that report was sent to Apple. “There was no response,” said Debby Chan Sze Wan of the group. “A few months later I went to Cupertino, and went into the Apple lobby, but no one would meet with me. I’ve never heard from anyone from Apple at all.”
The morning of the explosion, Mr. Lai rode his bicycle to work. The iPad had gone on sale just weeks earlier, and workers were told thousands of cases needed to be polished each day. The factory was frantic, employees said. Rows of machines buffed cases as masked employees pushed buttons. Large air ducts hovered over each station, but they could not keep up with the three lines of machines polishing nonstop. Aluminum dust was everywhere.
Dust is a known safety hazard. In 2003, an aluminum dust explosion in Indiana destroyed a wheel factory and killed a worker. In 2008, agricultural dust inside a sugar factory in Georgia caused an explosion that killed 14.
Two hours into Mr. Lai’s second shift, the building started to shake, as if an earthquake was under way. There was a series of blasts, plant workers said.
Then the screams began.
When Mr. Lai’s colleagues ran outside, dark smoke was mixing with a light rain, according to cellphone videos. The toll would eventually count four dead, 18 injured.
At the hospital, Mr. Lai’s girlfriend saw that his skin was almost completely burned away. “I recognized him from his legs, otherwise I wouldn’t know who that person was,” she said.
Eventually, his family arrived. Over 90 percent of his body had been seared. “My mom ran away from the room at the first sight of him. I cried. Nobody could stand it,” his brother said. When his mother eventually returned, she tried to avoid touching her son, for fear that it would cause pain.
“If I had known,” she said, “I would have grabbed his arm, I would have touched him.”
“He was very tough,” she said. “He held on for two days.”
After Mr. Lai died, Foxconn workers drove to Mr. Lai’s hometown and delivered a box of ashes. The company later wired a check for about $150,000.
Hitting the Apple Lottery
Foxconn, in a statement, said that at the time of the explosion the Chengdu plant was in compliance with all relevant laws and regulations, and “after ensuring that the families of the deceased employees were given the support they required, we ensured that all of the injured employees were given the highest quality medical care.” After the explosion, the company added, Foxconn immediately halted work in all polishing workshops, and later improved ventilation and dust disposal, and adopted technologies to enhance worker safety.
In its most recent supplier responsibility report, Apple wrote that after the explosion, the company contacted “the foremost experts in process safety” and assembled a team to investigate and make recommendations to prevent future accidents.
In December, however, seven months after the blast that killed Mr. Lai, another iPad factory exploded, this one in Shanghai. Once again, aluminum dust was the cause, according to interviews and Apple’s most recent supplier responsibility report. That blast injured 59 workers, with 23 hospitalized.
“It is gross negligence, after an explosion occurs, not to realize that every factory should be inspected,” said Nicholas Ashford, the occupational safety expert, who is now at the Massachusetts Institute of Technology. “If it were terribly difficult to deal with aluminum dust, I would understand. But do you know how easy dust is to control? It’s called ventilation. We solved this problem over a century ago.”
In its most recent supplier responsibility report, Apple wrote that while the explosions both involved combustible aluminum dust, the causes were different. The company declined, however, to provide details. The report added that Apple had now audited all suppliers polishing aluminum products and had put stronger precautions in place. All suppliers have initiated required countermeasures, except one, which remains shut down, the report said.
For Mr. Lai’s family, questions remain. “We’re really not sure why he died,” said Mr. Lai’s mother, standing beside a shrine she built near their home. “We don’t understand what happened.”
Hitting the Apple Lottery
Every year, as rumors about Apple’s forthcoming products start to emerge, trade publications and Web sites begin speculating about which suppliers are likely to win the Apple lottery. Getting a contract from Apple can lift a company’s value by millions because of the implied endorsement of manufacturing quality. But few companies openly brag about the work: Apple generally requires suppliers to sign contracts promising they will not divulge anything, including the partnership.
That lack of transparency gives Apple an edge at keeping its plans secret. But it also has been a barrier to improving working conditions, according to advocates and former Apple executives.
This month, after numerous requests by advocacy and news organizations, including The New York Times, Apple released the names of 156 of its suppliers. In the report accompanying that list, Apple said they “account for more than 97 percent of what we pay to suppliers to manufacture our products.”
However, the company has not revealed the names of hundreds of other companies that do not directly contract with Apple, but supply the suppliers. The company’s supplier list does not disclose where factories are, and many are hard to find. And independent monitoring organizations say when they have tried to inspect Apple’s suppliers, they have been barred from entry — on Apple’s orders, they have been told.
“We’ve had this conversation hundreds of times,” said a former executive in Apple’s supplier responsibility group. “There is a genuine, companywide commitment to the code of conduct. But taking it to the next level and creating real change conflicts with secrecy and business goals, and so there’s only so far we can go.” Former Apple employees say they were generally prohibited from engaging with most outside groups.
“There’s a real culture of secrecy here that influences everything,” the former executive said.
Some other technology companies operate differently.
“We talk to a lot of outsiders,” said Gary Niekerk, director of corporate citizenship at Intel. “The world’s complex, and unless we’re dialoguing with outside groups, we miss a lot.”
Given Apple’s prominence and leadership in global manufacturing, if the company were to radically change its ways, it could overhaul how business is done. “Every company wants to be Apple,” said Sasha Lezhnev at the Enough Project, a group focused on corporate accountability. “If they committed to building a conflict-free iPhone, it would transform technology.”
But ultimately, say former Apple executives, there are few real outside pressures for change. Apple is one of the most admired brands. In a national survey conducted by The New York Times in November, 56 percent of respondents said they couldn’t think of anything negative about Apple. Fourteen percent said the worst thing about the company was that its products were too expensive. Just 2 percent mentioned overseas labor practices.
People like Ms. White of Harvard say that until consumers demand better conditions in overseas factories — as they did for companies like Nike and Gap, which today have overhauled conditions among suppliers — or regulators act, there is little impetus for radical change. Some Apple insiders agree.
“You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive.
“And right now, customers care more about a new iPhone than working conditions in China.”
Gu Huini contributed research.